Evidence shows that being enrolled in health insurance can improve an individual's subjective well-being (SWB). Studies have shown, for example, that randomized Medicare expansion in Oregon resulted in a self-reported gain in happiness of 32 percent after about a year. Yet there is not much documentation of this link in low- and middle-income countries.

The authors of this study analyze individual-level data on China's integration of its rural and urban resident health insurance programs. This reform, expanded nationally since 2016, is recognized as a vital step towards attaining the goal of providing affordable and equitable basic healthcare in China, because integration raises the level of healthcare coverage for rural residents to that enjoyed by their urban counterparts. The study is the first of its kind, providing national-level evidence of the impact of China's urban-rural insurance integration on its population. 

Analysing 2011–18 data from the China Health and Retirement Longitudinal Study in a difference-in-difference framework with variation in the treatment timing, the co-authors find that the integration policy significantly improved the life satisfaction of rural residents, especially among low-income and elderly individuals. The positive impact of the integration on SWB appears to stem from the improvement of rural residents’ mental health (decrease in depressive symptoms) and associated increases in some health behaviors, as well as a mild increase in outpatient care utilization and financial risk protection. The positive impact of the integration on life satisfaction among rural residents persists and gradually increases within at least four years. This improvement is significant given the challenge of growing mental disorders brought on by China's accelerated urbanization. There was no discernible impact of the integration on SWB among urban residents, suggesting that the reform reduced inequality in healthcare access and health outcomes for poorer rural residents without negative spillovers on their urban counterparts.

Key messages

• The co-authors analyze insurance coverage and subjective well-being (SWB) based on a large natural experiment in China: the integration of the rural and urban resident health insurance programs.
• This study is the first to investigate the impact of urban-rural health insurance integration on the SWB of the Chinese population.
• The integration policy significantly improved the life satisfaction of rural residents, especially among low-income and elderly individuals.
• The positive impact of the integration on SWB appears to stem from the improvement of rural residents’ mental health and associated increases in some health behaviors, as well as a mild increase in outpatient care utilization and financial risk protection.